So what are the governments of the world doing to address this core problem? Breaking up the giant banks? Nationalizing them? Holding them accountable for their criminal acts? Making them write down their bad debts? Reining them in? Making them act more responsibly?

Of course not!

The governments of the world are instead launching more faux stress tests as a P.R. stunt.

Well-known British economic writer Jeremy Warner said last week that the European stress tests were a sham:

European stress tests weren't worth the paper they were written on ...

Most of us said at the time that the tests had been designed for banks to pass, yet the fact is that it is now hard to believe they took place at all. Conditions have no where near deteriorated as far as the tests had assumed, yet still Allied Irish looks essentially bust. In other words the tests were a lie.

If the Irish stress tests were a sham, what about the rest of the eurozone?

As the Wall Street Journal notes today, Europe is launching a new round of stress tests.

"As market sentiment toward the euro zone sharply deteriorates, European officials are planning a new round of bank "stress tests" that they say will be more rigorous than the widely discredited exams conducted earlier this year." Thank you for confirming the prior stress test, the one which found that not one Irish bank was impaired, was a bunch of bullshit. Of course, this being Europe, it will require another forceful intervention by the uber-propaganda czar Geithner to get European countries in line: "But the tests are already subject to bickering between countries. While some European leaders are pushing for next year's tests to be broader and more transparent than last summer's exercise, the agency that will oversee the tests says it might opt not to publicly disclose the results at all." And all will be proclaimed to be fine.

Concerns about the health of most large institutions have decreased, though investors remain nervous about the extent of losses banks face if they are required to repurchase flawed mortgages and mortgage-related investments. As part of its review, the Fed will require banks to assess their exposure to so-called "put-backs" of mortgages

Banks will also have to come up with their own set of metrics, including the ability to withstand "very severe" economic and financial-market events, the Fed said.

We are apparently expected to believe that this time will be different.

But the European and American stress tests will undoubtedly once again use overly-rosy economic assumptions, fail to account for the many trillions in debts hidden SIVs and other off-balance-sheet locations (see this and this) and duplicate the other core errors of the previous tests.

Postscript: Here's a funny Saturday Night Live video on the American stress tests:

IT IS THE MIND-NUMBING FAULT and the sheer god-like pretense of the omniscience of Bernanke's notion, that the answer is to be found in defeating the deflation to the detriment of everyone still standing -who saw this coming- and everyone who REALLY HAS THE REQUIRED COMMON SENSE NECESSARY TO PICK UP THE PIECES AND REBUILD A BETTER ECONOMY AND A BETTER WORLD.

Such a better economy and such a better world will not be a world of growth toward some fabled fallacy of a Star Trek progress.

You clowns...

You Jackasses...

Such a better economy and such a better world can only be a world of contraction toward a more sustainable paradigm of existence on this small, precious and wonderful planet.

The credit economy must go.

The welfare state must be dismantled.

The hubris of this universally suicidal scientific ethic must be eradicated from our minds.

We are all lucky enough -just to be alive.

We are all at the party of life.

Don't let these hare-brained rascals from Princeton convince any of you that messing it up even more and even faster is going to solve anything.

Making things better, except by stopping other human beings from doing all these immoral things, just isn't in the works -anymore-.

It's over.

Science is dead.

Princeton is dead.

And be thankful science and Princeton are dead.

Science and Princeton threatened to kill everyone on the planet for a while.

NOW get with the program, or lose your head the way Louis XVI and Marie Antoinette did, -shoved head-first into a guillotine, only to stare one last -eternal- stare into the bottom of a bloody wicker basket.

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